Will this ever happen again? Despite what you hear on the news or what our politicians are saying, reality is this is never going to happen again regardless of whether the government does anything or not. People tend to remember really big mistakes.
These are just a few examples of different loan programs and - most of which are not now avaible now. This is either because there are no investors willing to buy these loans as investments, or because the have been effectively or actually outlawed by the government.
So now the government stepped in and is fixing he problem - not! The fact is the problem fixed itself. There are no investors out there buying stated-income 100% financed loans - and there will probably never be again! Loosing a few trillion in wealth tends to make a permanent impression.
At the end of the day all the brokers did was match-up the borrower with the loan product they wanted. During that time borrowers didn't care about the loans they got, investors didn't care if the loan file was a complete work of fiction, and rating companies just cashed the checks. Everybody got what they wanted, but nobody understood what they got.
Of course, after a while these early pioneers of the new lending order were pretty sure they had re-invented the mortgage business. And it was hard to argue with them. They were making hundreds of millions of dollars; the loans were performing and everybody was getting rich.
In summery Sub-Prime lending was a difficult, marginally ethical, hard business that served a small cliental at a very high price. It was fairly specialized and not standardized. However it served a purpose. There was - and still is - a need for hard money and sub-prime lending.